Timetable for spectrum auction to be brought forward - draft act out for comments

Timetable for spectrum auction to be brought forward - draft act out for comments

Preparations are underway for the auctioning of the 800 MHz frequency band allocated to 4G networks. The Ministry of Transport and Communications has sent out for comments a draft act on spectrum auction.

The purpose is to organise the auction earlier than originally planned. According to the proposal, the process would be launched during 2012: following entry into force of the act, licences would be announced open for application, and the auction would be held in early 2013.

'The licence terms and conditions together with the schedule set forth in the draft mean that by 2019, 4G networks will be available to practically everyone in mainland Finland,' Minister of Housing and Communications Krista Kiuru said.

According to Minister Kiuru, the fourth-generation mobile networks now being created will truly enable wireless use of Internet services in all parts of the country. 4G networks are currently available only in the largest urban areas.

A total of 2x30 MHz of frequencies will be auctioned in 2x5 MHz frequency pairs. A starting price will be set for the frequencies, generating auction revenue of at least EUR 100 million to the State. In proportion to the 20-year-long licence period, the amount would only account for about one per mille of teleoperators' annual turnover. The sum would be paid to the State during a period of five years.

The 800 MHz frequency band to be auctioned is cost-effective. A single base station can cover a geographical area at least five times larger than that covered by a base station in the 2.6 GHz band auctioned in 2009. The coverage of an 800 MHz base station is also greater than that of the broadband base stations in the 900 MHz band.

Objectives of the auction include extending the availability of mobile broadband, especially in sparsely-populated areas.

In accordance with the Government Resolution on Spectrum Policy, the licences to be granted by auction will include conditions on how extensive the networks must be, and on what schedule they must be build up. This will ensure that new 4G networks are set up quickly enough.

One of the frequencies to be granted would incorporate a condition requiring that the network must be constructed to cover 95 per cent of the population in mainland Finland within three years and 99 per cent within five years of the start of the licence period. The other frequencies should provide a 97 per cent coverage within five years.

The intention is that spectrum auctioning becomes a standard practice. The reform of legislation on electronic communications currently under preparation (Code for Information Society and Communications Services) would be carried out in such a way as to allow the auction process to be used in the future as well, especially in granting licences for new frequency bands.

Granting frequencies by auction has a long tradition in many countries in Western Europe. Before the experimental auction held in 2009, Finland was the last country in Western Europe where the issuing of licences was purely based on the authorities' consideration without any significant fees involved.